There is one certain aspect of life that will never change- it is unpredictable. You may never be able to know what might happen, but you have the option to take the important measures for securing yourself as well as your near and dear ones from any unexpected occurrences like untimely demise. Life insurance offers a necessary coverage for making sure that your loved ones are capable of dealing with the unforeseen expenses on the hospital or medical bills. One smart investment in this regard would be a term life insurance plan.
What do you mean by Term Insurance?
A term insurance policy is a kind of life insurance, which covers a term or a period of years. It refers to the purest kind of protection plan since the nominees get the whole amount of sum assured in one go. If you invest in it at a young age, term insurance ensures lower premiums and turns out to be a good investment tool for you.
Based on your age, the inclusion of add-ons or riders, pre-existing illness, and family requirements, the terms of the insurance policy can be determined. In case the insured individual passes away, the death benefit is payable to the beneficiaries or the nominees. In case the insured person outlives the insurance tenure, the insurance policy matures.
Traditional Life Insurance v/s Term Life Insurance
Although term insurance is a kind of life insurance plan, its definition is different from the definition of a traditional life plan. The basic difference is that the former offers just a death benefit, while a traditional life cover policy offers a maturity as well as a death benefit. Another point of difference is that term insurance is comparatively more economical and affordable and offers a higher amount of coverage while traditional life cover includes a higher amount of premium, average coverage, and lower returns. Also, there is a difference between the two in terms of flexibility. It is comparatively easier to surrender your term insurance plan as opposed to a traditional life insurance policy.
Why is Term Insurance considered to be a Smart Investment Decision?
A lot of people usually purchase a term insurance policy in regard to what their financial planner advises them. However, they fail to realize the necessity of buying such a kind of life insurance plan.
The following are the reasons why buying a term insurance policy is a smart and recommended investment decision.
- Huge Coverage at Low Premiums
Because there are no maturity benefits as well as other complexities offered in this plan, term life insurance provides a higher amount of coverage at a premium that is economical for the majority of the people. In case you purchase life insurance online, the premium amounts will be even lower because of the absence of middlemen and agents. Moreover, buying insurance at a young age will let you enjoy a lower amount of premium. If you buy the same term plan after a few years, you will have to pay a higher premium amount.
- Protection against Unfortunate Situations in Life
Purchasing a term insurance policy offers you the much-required financial protection for dealing with unfortunate events like an accident, permanent or temporary disability, or untimely death.
- You and your Loved Ones get Early Coverage
Why risk your life as well as the lives of your loved ones by delaying buying a term insurance plan? Investment in term plan will offer security against the financial hardships that may arise and reduce the stress that gets passed on to your loved ones if and when you are not around to take care of them.
- Effective Financial Planning
You should start planning early for securing a better and stable future. Effective and sound financial planning will help you and your loved ones in dealing with unfortunate and unexpected financial events. Term life insurance is considered to be a smart investment in this case because it helps you in making sure that your future remains hassle-free.
- Flexible Terms of the Policy
The flexibility in the terms of the policy can help you in reaping many benefits. Based on your family needs, age, time, pre-existing illness, and more, the term policy can be customized for suiting the insured person and riders. A longer policy term ensures a lower amount of insurance premiums.
- Helping in Meeting with Long-Term Objectives
Making an investment in this type of life insurance is planning for your long-term financial objectives. It helps in building a corpus, which can be used in multiple ways. It is also a good way for securing a stress-free peaceful life after retirement.
- Ensuring Financial Stability
One of the basic reasons for opting for any type of insurance is financial stability and rightly so. The unfortunate demise of the family’s breadwinner or any earning member of the family can have a bad impact on the lives of the remaining members, both emotionally and financially. In these cases, taking care of household expenses and managing the basic requirements of your family becomes a very tough task. Term insurance offers the entire sum assured amount to the nominees after the death of the insured; hence, making the remaining family members’ lives easier in financial terms.
- Taking Care of Debts
Almost every individual holds some or the other debt or loan in their name. It could be a home loan, education loan, personal loan, auto loan, mortgage, credit card debts, or other kinds of debts. The proceeds you get from the insurance company pays off the loans along with the interest rate and make sure that the stress or burden of these debts does not come on the shoulders of your family after you.
- Can be a Replacement of Income
In the event of the sudden and untimely demise of the breadwinner of the family, who happens to be the insured person, the sum assured of the term plan will act as a replacement of the income. It helps to deal with the instant financial needs of the family.
- Benefits of Riders
There are various additional benefits or riders included in term life insurance. These riders add up to the list of perks of the policy. They may include riders like partial disability, critical illness, and more.
The Bottom Line!
Term life insurance is referred to as a smart investment and your step towards the right direction in terms of your financial life. It helps you to secure your future with a sound and effective financial planning. Making this investment earlier in life will help you get lower premiums and offer a safety net for your loved ones for dealing with the financial burdens.
